GIPS - 10 or 5 required, correct, either, comply, about

Chuckrox8

In the sample, one of the firms tried to initially comply with 5 years and this was not correct. However, in the text - they can start with 5 and grow out to 10 (even if they have been in existence for more than 5. ??


Also in the sample, it says that net of fees is required (and is not talking about SMA). In the text, Gross is recommended but either are okay. ???


Not that these are the only discrepancies, but are "big ones". Any ideas for the differences?

mp3bu

Another wrinkle is that you could have performance data for 5 years but for some reason only the last 4 of it is compliant. (Let's assume you can't do anything to reconstruct the 1st year's performance to make it compliant.) You can still be compliant by forming your composite after the first year and reporting the 4 years that you have. But if that non-compliant year was after 1/1/00, then you can't link the non-compliant performance to the compliant performance.

Furthermore, I think it's entirely possible that have 10 years of performance that would qualify as compliant, but if you decide to form your composite starting 5 years ago (say after a bad 5 year start), there's nothing to stop you from doing so. You just can't claim compliance prior to that composite start date.

Am I wrong about this?



Edited 1 time(s). Last edit at Friday, June 3, 2011 at 05:12PM by abmaroon.

strikethree

here's the official GIPS wording

5.A.1 The following items MUST be presented in each COMPLIANT PRESENTATION:
a. At least five years of performance (or for the period since the FIRM’S
inception or the COMPOSITE INCEPTION DATE if the FIRM or the COMPOSITE
has been in existence less than five years) that meets the REQUIREMENTS of
the GIPS standards. After a FIRM presents a minimum of five years of GIPScompliant performance (or for the period since the FIRM’S inception or the
COMPOSITE INCEPTION DATE if the FIRM or the COMPOSITE has been in
existence less than five years), the FIRM MUST present an additional year of
performance each year, building up to a minimum of 10 years of GIPScompliant performance

NakedPuts2011

Bottom line show 10 yrs unless you don't have it. Is that right

Roflnadal

Yes, but as CryFor said differently, you may have been in biz for 10 years, but to start GIPS you need only 5 and then each year add 1 more after first year.

Windjammer

in this particular case - composite was started in 1999 - but presentation showed only from 2005. That is not right. This would mean that the company is being selective about periods it wants to show performance, which isn't allowed per the standards.

Since the composite was created in 1999 - performance should go from 1999 onwards.

CP

lcw77

if i remember correctly the issue with the 5 vs 10 years was the the firm said they would just keep reporting 5 instead of adding a year each year until they hit 10.

I always though net or gross so long as disclosed per GIPS.

bkballa

sounds good. thanks